WATER REFUND FREQUENTLY ASKED QUESTIONS
The purpose of this update is to clarify how refunds for the 2013 Tiered Water Rate Structure will be issued to the City’s ratepayers. Because of the staff and labor intensive nature of calculating and issuing the refunds, the City has separated the refunds into the following rounds:
Round One (Residential): The first round of refunds for the period of February 2016 to March 2017 for Residential customers has been completed.
Round Two (Non-Residential and Multi-Family Residential): The next refunds to be issued will be for Non-Residential and Multi-Family Residential customers for the same time period as the First Round, i.e., February 2016 to March 2017. It is anticipated these refunds will be issued in July and August of 2018.
Round Three (Residential, Non-Residential, and Multi-Family Residential)**: Upon completion of Round 1 and 2 refunds, the City will begin processing refunds for all customers for the time period beginning January 2014 (the implementation date of the rate structure) through January 2016 (the last billing cycle prior to the start of the time period for the first round of refunds).
Round Four (Residential): The City will issue refunds for residential customers for the time period April 2017 through the date when the newly adopted rates are implemented, which is anticipated to be October 2018. Because the issuance of Round Four Refunds are governed by a deadline in a court settlement agreement, the issuance of these refunds will take priority over the refunds being issued for Round 3.
Round Five (Non-Residential and Multi-Family Residential)**: Round Five provides for the issuance of refunds for Non-Residential and Multi-Family Residential customers for the same time period as Round Four.
**Please note: One and Four are stipulated by the settlement agreement and therefore take precedence over the processing of the other Rounds that were implemented by subsequent actions of City Council. As a result, Rounds Three and Five of the refunds may potentially not be completed until after Round Four is completed for the reasons stated above.
For each Round, customers who are owed less than $1,000 for their refund will be credited on their water utility account and customers who are owed more than $1,000 will receive a refund check.
Under the current timeline, the new rate study will be released with the newly proposed rates in late October 2018.
At the January 9, 2018 City Council meeting, Mayor Nader announced during open session it had recently came to his attention that the FY 2017-18 budget is the first to contain a revenue line item for the City’s municipal water use. That prompted further inquiry by him into the City’s recent water loss report to the State, and also the HF&H water rate study that was adopted by the City Council in 2013. He expressed concern the HF&H study did not adequately disclose the fact the City was not budgeting revenue to pay for its municipal use, nor did it disclose the implications that practice may have relative to Proposition 218. With that he directed the City Attorney to oversee an independent fact finding mission to understand the history of this practice.
Meyers Nave has completed this fact finding investigation, and the City Council approved the release of the report related to the mission. This report can be reviewed here.
- Why did the Council previously decide not to issue refunds for the period of January 2014-January 2016 and then changed their minds at the March 13, 2018 City Council meeting to issue refunds all the way back to January 1, 2014?
Based on direction received from City Council, staff completed and in-depth analysis of the impacts associated with the issuance of refunds outside of the one-year statute of limitations established by the Jackson litigation. This analysis demonstrated that there was a public purpose associated with refunding money paid through utility rates beyond the one year statute of limitations and as such, the issuance of such refunds would not constitute a gift of public funds in violation of California Constitution, article XVI, § 6. Specifically, this analysis supported the following findings:
1. Since the adoption of Resolution No. 2018-24, staff has invested significant time and effort refining financial calculations toward the adoption of a new rate model.
2. Additional refunds may be issued without significantly impacting other rate payers.
3. Additional refunds will not impact the schedule of capital improvement projects or reserve levels as established by the City Council.
4. Additional refunds will not impact the City’s ability to manage and finance its utilities in the future.
5. The City will benefit by the issuance of additional refunds that serve to preserve the public peace, health, or safety.
6. The City will benefit from improved trust in local government.
7. Refunds will protect the City from the adverse risk of further or additional litigation regarding utility rates.8. There is a public benefit to the issuance of the refunds contemplated by this Resolution.
Yes. On March 13, 2018, City Council directed staff to issue additional refunds to any customer who paid greater than the cost to provide service (set by the settlement agreement at $2.76 per thousand gallons) throughout the entire rate period (January 1, 2014 until such time the new rates are adopted and implemented).
5,324 resident accounts, or 32% of our residential customers, will be receiving some kind of refund; the other 68% of accounts have paid at or below the cost of service during the time in question.
Of those customers receiving refunds, 98% of those refunds will come in the form of a refund credit to their water utility account, and the remaining 2% (or 138 accounts) which are owed a refund of $1,000 or more will receive refund checks.
- What did the ad-hoc water rate committee recommend regarding refunds for the time before February 2016?
This information was originally provided under the heading, " What about refunds for the time before February 2016?". As more action directly related to that question has occurred, the title of this section was renamed in the sake of clarity.
The settlement agreement approved in October 2017 establishes refunds for residential water customers going back to February 2016. However, the City Council reconvened the Citizen’s Ad Hoc Water Rate Committee to discuss the question of providing rebates going back to April 2015, or as far back as January 1, 2014, which is when the City’s current rates were adopted. This committee met on November 27th and 30th, 2017, and the agendas and minutes of those meetings are available here.
The committee recommended a plan that included:
- Issuing water refunds/credits going back to April 15, 2015. This is the date where Proposition 218 was clarified by the San Juan Capistrano ruling.
- Reducing proposed water rates over the next five years to collect roughly $1.9 million less, equaling the value of credits for the period between January 2014 (when the tiered system in questions was established) and April 2015.
This recommendation was informed by legal considerations, benefit to rate payers, and the desire to increase the rate competitiveness of the water utility.
This non-binding recommendation was taken to the City Council on January 23, 2018. Council declined to follow this recommendation, due to legal concerns regarding the gift of public funds.
There has been a lot of discussion about how the City of Lincoln's water rates compare to those of other jurisdictions, particularly in relation to a document produced by the Fair Oaks Water District. The City has reviewed the Fair Oaks Water District's report and found inaccurate amounts for the City of Lincoln's 3/4" and 1" meters. The City also contacted a majority of the other agencies listed to confirm their rates for the same consumption levels. City staff have subsequently prepared a corrected version of the analysis. In order to improve the value of the comparison, we have also separated the rates for the two different meter sizes.
An important note is that these charts assume a bi-monthly billing of 40 CCF, or 30,000 gallons. This is the equivalent of two monthly billings, each with 15,000 gallons. In the summer, only approximately 40% of the customer accounts meet this amount of usage, and only approximately 10% meet it during the winter months. View the chart of consumption ranges here.
These charts also reflect the current water rates, which will be replaced by a new, single-tier water rate system in early 2018.
- In 2013 the City adopted the current water tier system which included 5 tiers at that time. The tiered rates were adopted in part based on state mandates to encourage water conservation. At the time of water rate adoption, 66% to 80% of California water providers were using some type of tiered rates.
No. The establishment of utility rates is subject to the requirements of Proposition 218, which requires that established rates do not exceed the proportional cost of service to any specific class of customers.
As a result of the San Juan Capistrano case in 2015, the court held that a tiered rate structure similar to the one adopted in the City of Lincoln was invalid under the court's narrowly defined definition of Proposition 218. As a result of that ruling and concerns raised by members of the community, the City of Lincoln voluntarily suspended rates in Tier 4 and 5 in April 2017, as the City believed those rates were no longer in compliance with Proposition 218.
- In order to issue the refunds in a timely manner, the City is issuing credits to the water bills of all customers who are due a refund under $1,000. Those owed more than $1,000 will be issued a refund check.
- Yes. The City will send notification of pending refund to the address on record. If you have moved and your mail is no longer being forwarded, please email email@example.com with your previous Lincoln address AND your new address where you want your refund to be mailed.
- Yes. As long you were listed as the water customer account on the account during the refund period.